Category Archives: Fractional reserve banking

The FOUNDATION for our Debt-Based Monetary System: PROMISES to Pay that Can’t Possibly be Kept.

For the past several months, I’ve been exploring an hypothesis that strikes me as fantastic, unlikely and yet (probably) true. In broad strokes, it’s the idea that our fiat, debt-based monetary system requires ever more total debt to function. Going deeper into debt is not optional; we are forced by our debt-based monetary system to do so. I.e., if the American people ever stop going deeper into debt, the whole debt-based monetary and economic system will collapse like a junkie forced to quit heroin cold turkey.

If my hypothesis is roughly correct, the persistent growth in the National Debt (it nearly doubled under Obama) is not the result of governmental negligence or self-serving politicians who get elected by promising more “free lunches” (services purchased with debt). Instead, our National Debt must increase (perhaps geometrically) in order to feed, protect and sustain our debt-based currency and economy.

“Today, we see China, Russia, India and others are moving to protect themselves from the systemic risk of the over-printed dollar. It’s become clear to many that the dollar’s world-reserve-currency status cannot last. It’s just a matter of time before the entire currency system will face a radical resetreflecting today’s reality.”

Will Somebody Please Turn Off the Bubble Machine?[courtesy Google Images]

I have no doubt that the cornerstone of the New World Order (N.W.O.) is a debt-based monetary system. I have no doubt that, if today’s debt-based monetary system were to fail, The Powers That Be would work feverishly to install a second, debt-based monetary system. If the today’s debt-based monetary system (built on fiat- and/or petro-dollars) failed, the N.W.O. would seek to impose a “new-and-improved” debt-based system that might be built on Special Drawing Rights (SDRs). These SDRs are nothing more than new debt-instruments issued by the IMF rather than the old debt-instruments currently issued by the Federal Reserve and other central banks.

This article is conjectural. The conjecture flows from the idea that a monetary system that’s based on debt (mere promises to repay) rather than on assets (actual payments denominated in physical gold or silver) and leads us to some very strange economic implications.

For example, in a debt-based monetary system:

1) Debt is our measure of wealth. I.e., the more debt you have, the wealthier you become (or at least, appear). Could you enjoy the apparent “wealth” of living in a $250,000 home, if you hadn’t first been able to go into debt for a mortgage? Could you enjoy the apparent “wealth” of driving a new car, if you couldn’t first go into debt for an auto loan at the bank? Our apparent wealth is a function of each debtor’s capacity to make promises rather than engage in productive work. As an extreme example, think “liar’s loans” (people who couldn’t possibly repay their loans were still entitled to move into expensive homes based on mere “promises” to repay).

3) The governments and creditors of the world should have a vested interest in restricting debtors’ access to bankruptcy laws. If debtors can’t file for bankruptcy, they can’t destroy the debt and debt-instruments that support the debt-based monetary system.